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Saturday, October 01, 2005

GEMAYA : Next Generation Online Conglomerates

There’s a new sort of Internet colossus on the rise, and it is poised to wreak havoc on on large service industries across the world. As Internet companies rapidly expand their services, they may become the biggest rivals to retailers, banks, and telecoms worldwide. David Kirpatrick writes,despite the fact that the first phase of the Internet era, widely expected to displace the brick-and-mortar retailers - did not exactly throw such entities out of business, this time it’s not just retailers who face daunting challenges, but service companies too, and in some of the biggest - and most lucrative industries. The emerging small group of integrated online commerce conglomerates broadly aim not only to replace shopping malls, but also TV networks, telecommunications, and the banking system, among other services on a global scale. The list of contenders named GEMAYA: Google, eBay, MSN, Amazon, Yahoo, and AOL are moving towards this. Each has, in one way or another, the ambition to be a one-stop shop for all kinds of consumer commerce and services. Google, and possibly Microsoft and others, will attempt to develop their own online payment services to match eBay’s PayPal. And eBay will almost certainly morph PayPal over time into something that looks more and more like a multi-functional consumer bank. David predicts that Google, and probably others among this net colossi, will also eventually develop what are, in effect, banks. Yahoo and Google, for example, are moving quickly to add video news and entertainment to their offerings. Each is coming at this set of combined opportunities from its own strength—Amazon and eBay from shopping and commerce, Google from search and advertising, MSN from communications and news, AOL from instant messaging and entertainment content, and Yahoo from personalization, communications, and shopping. Probably they’ll never all offer exactly the same variety of services. The more it can be analyzed the more clear it is that the signs are clearly pointing in this direction. The more pervasive broadband usage is among the local population, the bigger and more wide-ranging the challenges may be to smaller, local companies, and the faster those challenges may be felt. As Zoli points out that all of a sudden all these local businesses are competing with a much-lower-cost provider thousands of miles away whose customers reach them only digitally. So as PayPal or Skype or eBay or Google get bigger, they become harder to compete with. While I agree with David's optimism, it would take several decades even in this internet age for this to become anywhere near real - the churn that this could bring about in the US would be far more than that can be felt outside the US - This would be the biggest test for these entities to win first before making impact outside of the US. Also the reigning concern about these conglomorates to justify the marketcap and the cashflow - ability of these firms to scale up to comply with myriad of local regulations across the physical borders.But the concern raised herein, the potential US dominance coupled with the US Governments desire not to lose control of the internet would certainly raise several concerns globally.

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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
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